The Hindu Business Line : Pvt telecoms not liable to pay I-T on transit charges

NEW DELHI: Private cellular operators would not be liable to pay income tax on the fees paid by them to state-owned telecom companies for routing the calls of their subscribers, as was the practice before the direct connectivity regime, the Delhi High Co urt has ruled.

Telecom companies used to pay transit charge to MTNL and BSNL for providing interconnection access for carrying their customers' calls to users of other networks, which was prevalent till mid-2007.

The Court over-ruled the contention of the Income Tax Department that the facilities provided to cellular companies comes within the ambit of technical services, which is taxable under Income Tax Act.

A Bench comprising Justice Mr B D Ahmed and Mr Rajiv Shakdher held that the service does not come within the ambit of technical service, as there is no human element involved in the whole process and it is done by the machines.

“The facilities provided by MTNL/other companies for interconnection/port access is one which is provided automatically by machines. It is independently provided by the use of technology and that too sophisticated technology, but that does not mean that MTNL/other companies, which provide such facilities are rendering any technical service under the Income Tax Act,” the Bench said.

“The expression 'technical service' would have reference to only technical service rendered by a human. It would not include any service provided by machines or robots,” it said. - PTI

Prev: Ministry refuses to ask NMDC to withdraw price hike

Business Line | NUS Index |